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Morningstar's Manager Check-Up

REAFFIRMED RATINGS: Why Morningstar fund analysts positively rate Franklin UK Equity Income, Artemis Global Income and Matthews Asia Pacific Tiger

Jonathan Miller 14 November, 2018 | 12:29PM

 

 

Jonathan Miller: Welcome to the Morningstar Manager Check-up for the fund updates from our analyst team.

Franklin UK Equity Income has been managed by Colin Morton since 1995, so he’s one of the most long-tenured managers in the UK. His philosophy and process sit well with equity-income investing. He blends top-down analysis of the economy and stock market dynamics with a valuation-aware approach to stock selection.

He focuses on large companies with strong and growing free cash flows, sustainable superior competitive positions in their industries, and attractive dividend yields and/or dividend growth. This is a core, benchmark-aware approach; as such, the aim is to add value in a steady, incremental manner to build a strong cumulative record over the longer term.

We believe the fund benefits from the valuation discipline that Morton applies to his stock-selection process and his assessment of the economic cycle. The low charges which are capped at 0.55% add to its appeal and the fund retains a Morningstar Analyst Rating of Silver.

Artemis Global Income has been run by Jacob de Tusch-Lec since 2010 and offers something different to many funds in this space. While most equity-income funds heavily rely on bottom-up stock-picking, macroeconomic analysis also plays an important role at this fund. It further differentiates itself by looking outside the traditional universe of dividend stocks commonly found in the portfolios of peers.

This leads to a stronger tilt towards mid- and small caps. There’s also a contrarian style which tends to give it a value tilt, with the opportunity set is based on three different types of dividend stocks; core, growth, and special situations. We have we have confidence in the abilities of de Tusch-Lec to execute the process well and the fund earns a Morningstar Analyst Rating of Bronze.

The Matthews Asia Funds Pacific Tiger has had Sharat Shroff as manager since 2010 and given Matthews is a dedicated Asia house, he’s backed by a strong and seasoned team of analysts. Along with co-manager Rahul Gupta, use a distinctive and proven discipline. In particular, they readily consider mid- and small-cap companies as they pursue strong and sustainable growers that are selling at moderate valuations.

They pay ample attention to firms that will benefit from rising income levels across the region, and they're comfortable if their stock selection leads to sector and geographic exposure that deviates from the index. The strategy has a longer track record, based on a version of this fund that’s sold to US investors, where strong risk adjusted returns have been posted. With a strong pedigree in the Asia space, the fund’s Morningstar Analyst Rating of Silver has been reaffirmed.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Artemis Global Income I Acc1.32 GBP-0.40
Franklin UK Equity Income W Acc2.14 GBP0.37
Matthews Asia Funds Pacific Tiger I USD17.98 USD0.29

About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK

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